401k Offset from previous employer

A woman we’ve talked to needing help has apparently had an offset made on a previous employer 401k.  She’d left employment, and after 90 days, they triggered it themselves.

Per our understanding, she has until taxes are filed to redeposit it into a like account.  I have a few questions regarding that.  First, she left employment at the end of 2023 and the offset was done in the 2024 calendar year.  My understanding is that she would need to deposit before the April 2025 deadline as it was done as an event in 2024, correct?  Additionally, she already contributes to a new 401k.  If a deposit is made to avoid the tax on the offset, are they allowed to deposit to fix it above what their 401k current contributions are?  For instance, if she contributes $15,000 to her current 401k and then deposits $30,000 for the offset to the loan into an IRA, it won’t cause any issues, correct?

 

 

Thank you.



She has not only to the 4/2025 tax due date, but to 10/15/2025 if she files an extension or even if she files in April, since the extended due date applies in the same manner as correcting an excess contribution. The rollover can be done to any eligible retirement plan including an IRA, and does not have to be done with a single deposit. If the rollover is made to an IRA or Roth IRA, the custodian should be told to code the deposit as a late rollover of a plan offset contribution. A plan loan offset rollover does not affect the amount of regular contributions allowed to the plan.



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